Despite COVID-19, MTN insists on shedding stake in Nigeria
By Omobayo Azeez
Despite the economic disruption triggered by Coronavirus pandemic (COVID-19), MTN Group Ltd will push on with its plan to reduce its majority stake in the wireless carrier’s business, it was gathered recently.
However, the turmoil of the pandemic may require the sale to be done in smaller chunks than anticipated but there is no going back on the plan.
The impact of the pandemic on international financial markets has not changed the importance of selling part of the 79 per cent shareholding to local investors, Chief Financial Officer (CF) Ralph Mupita said in a chat with the press.
However, the rest of a three-to-five-year plan to dispose of 25-billion rand ($1.4 billion) of assets will probably take a back seat for now, he said.
Mupita said: “In Nigeria we still want to do part of our retail offer, even if it’s a smaller part of the total planned sale. We are applying our minds to doing this at the moment.”
MTN is disposing of part of its largest division after a series of disputes with federal government agencies, especially over tax payments and withdrawal of cash from the country.
The plan is to sell about a 15 per cent stake to local investors, reducing MTN’s ownership to about 64 per cent.
MTN Nigeria Communications Ltd was listed on the floor of the Nigeria Stock Exchange (NSE) in Lagos last year and is the country’s second-biggest publicly traded company.
Nigeria is MTN’s biggest market, accounting for a third of overall 2019 revenue and almost 40 per cent of earnings before interest, taxes, depreciation and amortisation.
The Johannesburg-based company is also the biggest provider of telecom services in the country, with almost 69 million customers, according to the Nigerian Communications Commission (NCC).
The drastic fall in oil prices, hurting major producers including Nigeria, and the outbreak of the coronavirus has weighed on MTN’s share price, which hit 15-year lows last week.
The stock has since rallied for six straight days, and traded as much as 21 per cent higher in Johannesburg two days before the chat to record its biggest jump in two decades.
“We of course have no visibility on how all of this could play out, but the business currently has a resilient balance sheet and is highly cash generative, with most of our business coming from pre-paid contracts,” Mupita said.